Cabinet will today decide whether it can afford to cut taxes on oil imports as it seeks to defuse the ongoing protests against rising food and fuel prices.
Cabinet sources told this newspaper that finance minister Syda Bbumba is expected to show her Cabinet colleagues today whether reducing taxes on fuel imports would bring relief to motorists without adversely affecting tax revenues. Her presentation comes less than 24 hours before the next round of walk-to-work protests are due. The matter came up last week but because of disagreements, it was left to Minister of Finance to come up with the presentation, a Cabinet source said, speaking anonymously because of the confidential nature of Cabinet discussions.
Political reaction
Some of us disagreed because we cant take such a risk to hurt the economy. There were others who wanted taxes cut as a political reaction to the crisis. Junior finance minister Ruth Nankabirwa confirmed meetings were being held at the ministry to seek a solution to the rising inflation.
President Museveni was initially opposed to any tax cuts infamously urging motorists to be frugal and not drive their cars to bars but he appeared to soften his position last week when, with the death toll from the protests rising to five, he said he would accept a cut if it did not jeopardise funding for infrastructure projects.
The Kenyan government recently cut taxes on petrol and diesel by 30 and 20 per cent respectively after citizens threatened to protest over high prices. The government levies Shs850 per litre of petrol, Shs530 on a litre of diesel and Shs200 on a litre of kerosene in tax. A similar cut would bring petrol down from Shs3,500 to Shs3,245 and diesel from Shs3,100 to Shs2,994 if other cost factors, including world crude oil prices, remained constant